“Cautiously bullish” is how money manager Churchill Management Group describes their tactical portfolios at present. Their latest commentary addresses the concern that the market may not be as wonderful as we are told.
“Given that we are well past the “buy zone” off the bottom, at this stage we are examining our indicators for signs of a top, or when it will be time to protect.
Fundamentally, the story has changed very little. The key driver has been the historically low interest rates causing a lift in asset values. No matter how bad U.S. economic fundamentals come in, the Fed’s ability to keep interest rates low works as the trump card that keeps investors in the stock market and prices moving higher. In simple terms, many investors are frustrated by the low returns on other investment alternatives, such as bonds, and feel forced into the stock market in hopes of increasing total returns. The laws of supply and demand then take hold, and with the increased demand for stocks, prices go up.“
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